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Conch Republic Electronics Case

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Conch Republic Electronics Case
| | Case #4 - Conch Republic Electronics | | | | | | | | | | | | | | | | Input Area: | | | | | | | | | | | | | | | | | | | | | | | | | | | Equipment | $15,000,000 | | | | | | | | Salvage value | $3,000,000 | | | | | | | | R&D | $750,000 | sunk cost | | | | | | | Marketing study | $200,000 | sunk cost | | | | | | | | | | | | | | | | | Year 1 | Year 2 | Year 3 | Year 4 | Year 5 | | | | Sales(units) | 70,000 | 80,000 | 100,000 | 85,000 | 75,000 | | | | Depreciation rate | 14.29% | 24.49% | 17.49% | 12.49% | 8.93% | | | | Sales of old PDA | 80,000 | 60,000 | | | | | | | Lost sales | 15,000 | 15,000 | | | | | | | | | | | | | | | | Price | $250 | | | | | | | | VC | $86 | | | | | | | | FC | $3,000,000 | | | | | | | | Price of old PDA | $240 | | | | | | | | Price reduction | | | | | | | | | of old PDA | $20 | | | | | | | | VC of old PDA | $68 | | | | | | | | Tax rate | 35% | | | | | | | | NWC percentage | 20% | | | | | | | | Required return | 12% | | | | | | | | | | | | | | | | | Sensivity analysis | | | | | | | | | New price | $260 | | | | | | | | Quantity change | 100 | NOTE: Change in units per year | | | | | | | | | | | | | | | | | | | | | | | | Output Area: | | | | | | | | | | | | | | | | | | | | | | | | | | | Sales | Year 1 | Year 2 | Year 3 | Year 4 | Year 5 | | | | New | $17,500,000 | $20,000,000 | $25,000,000 | $21,250,000 | $18,750,000 | | | | Lost sales | 3,600,000 | 3,600,000 | | | | | | | Lost rev. | 1,300,000 | 900,000 | | |
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